No end in sight to Eskom delays in signing renewable energy PPAs

Chris Yelland, EE Publishers, 4 August, 2017.

There appears to be no end in sight for resolution of the impasse caused by Eskom’s refusal to sign any new power purchase agreements (PPAs) with renewable energy independent power producers (IPPs) in terms of the Department of Energy’s (DoE’s) internationally acclaimed Renewable Energy IPP Procurement (REIPPP) programme.

In an interview with EE Publishers’ investigative editor Chris Yelland on 4 August 2017, Energy Minister Mmamoloko Kubayi would not give any specific timeline for the signing of 37 duly procured renewable energy supply contracts from IPPs, which have now been delayed for over two years.

“We have recently expanded the DoE, DPE and Eskom task team investigating the matter to include the DG of the National Treasury. So there’s been a lot of work done. But a big issue is Eskom’s balance sheet”, said Minister Kubayi.

“Treasury issues guarantees to Eskom, and Eskom is concerned that if they are required to sign PPAs for REIPPP bid window 3.5, 4 and 5 projects, it will further impact negatively on their balance sheet. This is why we had to include Treasury to have a look at the impact to ensure we do not get another downgrade. We are waiting for the task team to come back to us.”

Following President Zuma’s instruction in his state-of-the-nation address on 9 February 2017 for Eskom to sign the outstanding PPAs with IPPs, Minister Kubayi’s predecessor, Tina Joemat-Pettersson set a date of 11 April 2017 to sign the PPAs.

However, following her appointment on 31 March 2017, new Energy Minster Kubayi postponed the signing in order to enable further consultation with Department of Public Enterprises (DPE) Minister Lynne Brown and Eskom, and a DoE, DPE and Eskom task team was established to chart the way forward and report back by the first week of June 2017.

The subsequent further addition of the National Treasury to the task team has now delayed resolution of the matter still further, with no end in sight…

(Ed. note: Perhaps we have to wait for yet another Treasury Minister? Pravin, come back!)

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